Many federal contractors have heard about the revamping of the Federal Acquisition Regulation. Variously called FAR 2.0, the Revolutionary FAR Overhaul, or simply RFO, this project has been undertaken by the Office of Federal Procurement Policy (OFPP) and the Federal Acquisition Regulatory Council (FAR Council). An executive order got the ball rolling, setting forth the mandate to create FAR 2.0 by October 12, 2025. We wrote about it in our earlier post, and described it as two parallel tracks. Track 1 involves a rewrite into “plain language” and removing non-statutory and unnecessary content. Track 2 involves the development of the non-mandatory guidelines to guide procurement officials.
Our earlier posts regarding the RFO can be found here: Executive Order, Overview of FAR 2.0, FAR Part 6, FAR Part 8.
The revision of the FAR sections has continued over the past few months, with additional proposed revisions being released throughout 2025. In this post, we’ll review one proposed revision that seems to make some significant changes to the language: Part 19 – Small Business. A key takeaway is the FAR will retain the small business rule of two.
Part 19 – Small Business
This part of the FAR covers rules designed to protect and enhance the use of small businesses in federal contracting. The language was issued on September 26, 2025 and has been adopted by the GSA so far.
Per the Practitioner Album, the FAR Council says the “revision preserves most substantive requirements while reorganizing them to align with the actual workflow of a contracting professional.” As explained in further detail below, it maintains the small business rule of two above the simplified acquisition threshold as being “essential to sound procurement.”
The following rules would be retained:
- Exclusion of Particular Source or Restriction of Solicitation to Small Business Concerns (10 U.S.C. § 3203 and 41 U.S.C. § 3303)
- Small Business Act (15 U.S.C. §§ 631 et seq)
- Small Business Concerns (41 U.S.C. § 3104)
Many sections were updated to clean up or clarify language, and many clauses have been retained. For instance, most definitions have been retained.
Subpart 19.1 now contains a roadmap for acquisition planning, focusing on stages such as presolicitation, small business goals, and coordination with SBA.
Small Business Rule of Two
As we have discussed on SmallGovCon a number of times, the small business rule of two generally requires a procurement to be restricted to accepting bids only from small businesses where there are two or more small businesses can perform the work at fair market prices
FAR 19.502-2 contains the current version of the small business rule of two, requiring that an agency set aside a procurement over the simplified acquisition threshold for small businesses when there is 1) the reasonable expectation that two or more small businesses can perform the work and 2) award will be made at fair market prices.
The updated rule would move to the following location:
Proposed 19.104-1 Total small business set-asides.
(a) A “set-aside for small business” is the limiting of an acquisition exclusively for participation by small business concerns. For contracts above the micro-purchase threshold, the contracting officer must set the contract aside for a small business if there is a reasonable expectation of obtaining offers—
(1) From two or more responsible small business concerns; and
(2) That are competitive in terms of fair market prices, quality, and delivery.
(b)(1) The contracting officer makes the determination to do a small business set-aside under paragraph (a). The contracting officer must document the reason when a contract is not set aside for a small business as required.
(2) If the contracting officer rejects a recommendation by SBA to do a small business set-aside, see 19.102(f).
This rule removes the separate (but very similar) rules that currently apply to procurements (a) between the micro-purchase threshold and simplified acquisition threshold, and (b) those over the simplified acquisition threshold. Instead, the rule would be the same.
However, the rule of two would not apply to orders, meaning contracting officers may, but aren’t required to, set aside orders placed under multiple-award contracts. We wrote about this change here.
Other Updates
For 8(a) “where an acquisition is below the competitive threshold, contracting officers must first try conducting the acquisition as a competitive 8(a) order using SBA-approved government-wide contracts that permit it before proceeding with a sole source 8(a).” This means that, under new 19.108-7, a competitive 8(a) award is favored over sole-source.
In addition, a contract “is automatically released from the 8(a) program if the follow-on will be set aside under the HUBzone, SDVOSB, or WOSB programs.” Updated FAR 19.108-11. This is a new option and will change the Once-8(a) rule. It used to only allow release from the 8(a) Program upon approval of the SBA.
Conclusion
This updated Part 19 represents some key changes for federal contractors to both the structure and substance of the FAR. But it leaves in the small business rule of two. We will stay tuned to the RFO revisions as they are rolled out and summarize them on SmallGovCon. Check back here for updates.
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